What is 409A and Does My Company Need One?

"409A" refers to a set of IRS rules and regulations related to deferred compensation. Company's that issue stock-based compensation, such as stock options, can run afoul of these regulations if they set the exercise price of stock options below fair market value at the time of grant, exposing employees to potentially significant unexpected penalties and taxes. A 409A Valuation Report properly prepared by a CVA, demonstrates compliance with these rules and regulations, and addresses potential risks relevant to auditors, lenders and potential investors or buyers.

A 409A Valuation Report is also often used as the basis for accounting for stock-based compensation under US GAAP or IFRS.

409A Valuations

Private Company Issuers of Stock Based Compensation

Buyer/Seller Assistance

Small Business Owners Considering Exit

Purchase Price Allocations

Public and Private Entities Party to Business Combinations and/or Reporting Intangible Assets

Estate and Gift Tax

Individuals with Wealth Exceeding IRS Gift Limitations

Intangible Asset Impairment Testing

Companies with Intangibel Assets on teh Balance Sheet

Financial Instrument Valuation

Issuers of Convertible Debt, Preferred Stock or Other Equity, Debt or Hybrid Instrument

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